Opinions are split as to whether the Bush administration's short-lived plan to establish what amounted to a terrorism futures exchange was a good idea. If it was, we'll likely never know because the way the idea was introduced to the public created little opportunity for a debate about its merits.Under the plan's terms, traders bullish on a biological attack on Israel before 2004, for example, would have the chance to bet on the likelihood of such events. Traders could open an account and then buy a contract on the likelihood of Jordan's prime minister being assassinated, for instance, paying $5. As more people bet on the same scenario, the cost of the contract might rise to $50. The plan was revealed prematurely by Senators Ron Wyden (D-OR) and Byron Dorgan (D-ND), who staged a press conference during which they denounced the idea as "harebrained," "offensive," and "useless." The first day's coverage echoed the Dorgan-Wyden line, condemning the plan on both moral and practical grounds. It wasn't until two days later that alternative views began to emerge. Analysts noted that similar markets have proven surprisingly good at predicting election outcomes, box-office returns, even the weather. Yes, it may seem ghoulish betting on whether governments will fall or leaders will be killed, but a little queasiness is a small price to pay for making us better prepared to counter terrorism. I'm not sure I buy those arguments. It seems to me that other markets rely on people behaving rationally, but many of those who have information about likely terrorist attacks are, by definition, not entirely rational. The incentive to provide disinformation would be high, and the stimulus to provide accurate information would be undermined by the fact that if the US used that information to thwart an attack, the bettor would never see any payoff. In any case, the defenders of the "futures market" were a day too late - an eternity in our media-saturated age. By the time the discussion got started, the Bush administration had lost control of the debate, and was frantically backpedaling - not only abandoning the plan, but also dismissing its apparent instigator, John Poindexter. By surrendering control of the message, the administration let its opponents "deposition" the plan before they could position it. They also gave up any opportunity to place the idea in its proper context by explaining that it originated in a Defense Department unit charged with developing out-of-the-box ideas, that it was modeled on other markets that functioned effectively in predicting future events, and that its potential benefits outweighed any concerns. It might not have won the debate, but at least there would have been one.
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